Transition Period for Impatriate Workers’ Regime: Deputy Minister Hon. Leo’s Announcement
As anticipated in our October 19, 2023 article, a draft law has begun circulating these days by which the Italian government intends to make important changes to the Impatriati workers’ regime (Art. 16, D. Lgs. No. 147/2015).
In summary, if the draft text that is circulating these days were to be approved, the following major changes would occur:
– the taxable income relief would be changed from the current rates of 70 and 90 percent to a single rate of 50 percent;
– the duration of the relief would be for only 5 years, with no possibility of extension for another 5 years (subject to meeting certain legal requirements) as at present;
– provision for a cap on subsidized income of 600.000 euros;
– beneficiaries would be required to have been tax non-residents in Italy for at least three tax periods (as opposed to only two at present);
– in the case of employees, the work activity would have to be carried out on Italian territory as part of a new employment relationship with a party other than the one with which the worker was employed in the country of origin, as well as with any other parties belonging to the same group (e.g. a subsidiary company);
– workers would be required to possess high qualification and specialization requirements;
– finally, these legal provisions would apply as of January 1, 2024, and this would affect all workers who move to Italy on or after July 2, 2023, as these individuals would acquire tax residency as of January 1, 2024.
As can be imagined, this news has raised a major debate and a strong stance from the affected categories and, in general, all interest bearers.
Deputy Minister Hon. Maurizio Leo, who is credited with the authorship of the aforementioned draft text, through Italy’s leading economic newspaper, Il Sole 24 ore, pledged to guarantee a transition period.
This is because many families, as mentioned in the previous article, have already started procedures to move to Italy, bought houses, left their jobs and signed new employment contracts starting in 2024. It is clear that for these people the impact of such a legal provision would be extremely penalizing.
Specifically, according to Vice Minister Leo’s statement to the aforementioned economic newspaper, the rule change would not affect those who have acquired registered residence (and therefore not tax residence) in our country by December 31 of this year.
This is precisely one of the most delicate aspects, because the drafts circulated so far had introduced the parameter of “tax residence”- which would in fact be obtained only after 183 days (i.e., six months and one day) of permanence on Italian soil- which, therefore, if applied, would leave excluded from the current rules (Art. 16 of D. Lgs. No. 147/2015) all those who moved to Italy after July 2, 2023.